You not only want to find a condo that’s a good value for the price, and one that you can love and live in for the long term, but also one you can be proud of – one that has all the features you’re looking for and a place you can entertain friends and family.
Not only do you need to consider location, but there can also be association fees and other extra costs, building maintenance issues, and rules for the complex. Everything involved in identifying and purchasing just the right condo can be overwhelming and complex, but with a few basic guidelines, you can find the home of your dreams.
It’s not the most glamorous topic, but the financial details are one of the most important pieces of the buying puzzle. Because you will pay about 125% more when you take out a loan for a condominium versus a regular single-family home, it is absolutely vital that one of the first steps you take is to shop for the best loan rate. According to the Consumer Financial Protection Bureau, a whopping 75% of home loan shoppers apply for a loan with just one lender. This is a mistake because even a tiny increase in rates can cost you tens of thousands of dollars in extra fees and interest costs over the period of the loan.
Choosing a complex that has been approved by Fannie Mae (a government-owned organization that buys home loans) will allow you to not only get a lower rate on your mortgage loan, but it will also automatically cause you to choose condo homes that possess a number of desirable traits. Some of these Fannie Mae requirements include:
- A properly insured property
- A building that is clear of litigation over issues like habitability, safety, and functional usage
- A building with at least 10% of its association dues in reserve
- A property in which no more than 15% of the association dues are over 60 days late
- A complex that is less than 25% commercial space
Fannie Mae has a convenient list of buildings and developments for which it will purchase loans. Once you find some approved homes that you’re interested in, there are some things you can do to protect yourself and ensure that you’re making the right decision. One of the most revealing actions you can take is to look at the condo board’s meeting minutes. This will show you a number of important pieces of information, including:
- The organization’s financial state: do they take in enough in fees to cover maintenance and daily functions, as well as sustain some reserves?
- The complex’s attention to maintenance: how quickly are maintenance issues resolved following their appearance in the meeting minutes?
- Disputes among the residents and board: this does not signal an efficiently run organization and should be taken as a red flag.
In addition to these steps, you should look over the building’s list of rules and decide whether you can live with all of them. Do they allow pets? How extensively can you modify the unit? How is trash dealt with? Is there sufficient parking, and what about overnight company?
If you approach your house hunt with common sense and take the time to thoroughly investigate all your options, you will soon find a condo you can be proud of and happy with for years to come.